Russia and Thailand identify plenty of common ground in energy discussions

19 December 2016

Delegations from Russia and Thailand identified several areas of mutual interest for discussion at the first meeting of a joint working group on cooperation in the energy sector, Deputy Minister of Energy of the Russian Federation Kirill Molodtsov told RIA Novosti.

The working group meeting took place on Wednesday at Thailand’s Ministry of Energy. The Russian delegation was headed by Deputy Minister of Energy Kirill Molodtsov, and the Thai delegation by Permanent Secretary of the Ministry of Energy Areepong Bhoocha-Oom. Also in attendance to address the meeting were representatives of Gazprom, NOVATEK, and Power Machines, as well as Thai state oil and gas corporation PTT and EGAT, the Electricity Generating Authority of Thailand.

Supplying liquefied natural gas

“One of the key topics under discussion is the supply of liquefied natural gas. This is something that concerns all Russian companies operating in the oil and gas sector, including Gazprom, NOVATEK, and Rosneft”, said Molodtsov, noting Thailand’s particular interest in this product.

“All three companies have already entered into active negotiations with Thai partners within the framework of individual working groups. Each company has its own capabilities, priorities, and areas of focus. They all have different levels of experience: some more, some less, but each project that is under discussion in these working groups is realistically attainable, that is, each of our companies will be able to find their niche in the Thai energy market.”

Nuclear power

“This area of cooperation was not raised by the first working group”, Molodtsov reported, “but the question of nuclear generation and the construction of two nuclear power plants between 2018 and 2035 in order to cover the country’s current imbalance in power consumption has been identified as a priority of Thai energy policy.”

The Deputy Minister of Energy continued: “This topic is certainly of interest to Russia-based Rosatom, and we will actively assist Rosatom in negotiations with its Thai counterparts.”

Asia-Pacific countries, including Thailand, interested in ‘Asian Energy Ring’

The Deputy Minister of Energy headed a Russian delegation that took part in two events held in the Thai capital: the first meeting of the Russian–Thai Joint Working Group on Energy Cooperation and the first meeting of the newly established Energy Committee of the UN Economic and Social Commission for Asia and the Pacific (ESCAP), which is headquartered in Bangkok. In his speech at ESCAP, the Deputy Minister announced Russia’s proposal to create an Asian Energy Ring to exchange seasonal and daily surpluses of electricity across a unified grid with other countries in the region.

“The Asian Energy Ring is in fact an idea that has been proposed in the past under a lot of different names”, Molodtsov told RIA Novosti. “The project is still in the initial discussion stage, but the subject is of interest to everyone.”

The Deputy Minister of Energy continued: “Our seasonal surpluses of electricity, opportunities for increasing hydro generation in Russia, and the potential for exporting electricity to China for further re-export to other countries in the Asia-Pacific region are, of course, priorities. This really is a potentially rich area for cooperation.”

He stressed that although much about the implementation of this idea will depend on particular technical solutions, almost all participants in the ESCAP Energy Committee expressed interest in the idea itself, including representatives from all the member countries of the UN Commission and, in particular, Southeast Asian countries.

“The Southeast Asian countries are also interested, of course: they currently have their own solutions, but it seems to me that during the period after 2025 it is completely realistic to envision that Russia will be in a position to export power abroad”, Molodtsov said. “By that time the entire region will probably require an additional external source of energy.” The Deputy Minister separately noted that Thailand was interested in participating in such a project.

Thailand is one of the largest consumers of electricity in Southeast Asia. In order to supplement its own electrical generation capacity, which is mainly thermal, for more than 40 years Thailand has purchased electricity from neighbouring Laos, which is rich in hydropower resources. More than 70% of the energy generated by hydropower plants in Laos is exported to Thailand.

Prospects for mutual investment

The Deputy Minister of Energy also noted that the Thai and Russian sides were both interested in investing in each other’s energy sectors. Russia will likely participate in the modernization of a number of oil refineries in Thailand in the event that agreements are reached to supply Russian crude oil.

Molodtsov reported that in recent years the volume of exports by Russian oil companies, including private ones, to Southeast Asia has increased. He cited the example of large deliveries to Vietnam by Lukoil.

The Deputy Minister also noted: “In such a situation, any of our oil companies would be interested in supplying both crude oil and refined petroleum products. Russian oil companies may therefore also be interested in participating in programmes that seek to utilize existing refining capacity in Thailand, possibly including the upgrading of oil refineries.”

Thailand also expressed interest in investing in oil and gas extraction projects in Russia.

Molodtsov noted: “The Thai side has a strong interest in opportunities whereby Thai companies can participate in various Russian projects involving both oil and gas. We will actively help to bring about this partnership by drafting approaches that Russian companies can propose for the use of licensed areas and the development of fields.”

Back to news